Performance pay : objectives, operation and outcomes
Performance pay has been identified as a key element of modem human resource strategy but published field research has been limited. This thesis investigated the objectives, methods of operation and outcomes of several performance pay schemes through the creation and testing of several hypotheses. Evidence was gathered through a longitudinal study in one organisation augmented by case studies in two further organisations. The findings showed that organisations demonstrated a mix ofoperational and cultural objectives for introducing performance pay while the desired outcomes were to promote cultural change, internal equity and increased motivation. However, the findings from the longitudinal survey showed that the desired outcomes were not met, as viewed by the employees. Motivation was not increased, nor did the scheme help to change culture while pay satisfaction remained at a low level, although the employee response to the scheme showed a limited improvement after operating for one year. Positive employee viewpoints were highly correlated to the level of communication and satisfaction with pay. In terms of the influence of employee characteristics, women and non-union members were significantly more positive than men and union members. A cluster analysis showed that negative views were more strongly held than positive views which statistically influenced the outcomes and employees with such negative views had a 'bundle' of characteristics, namely middle grade males with long service and union membership. This research has made a number of contributions. It has added to the limited number of UK field studies and its longitudinal nature provides unique fmdings. It has provided data on the launch and initial period of operation ofa perfonnance pay scheme, as perceived by the employees. It has shown further evidence of strategic use of performance pay schemes with a newly constructed model. The findings have important implications for management, especially in relation to the identification of key supporter groups and opponents to the scheme and the issues that employees regard as key to the success of the scheme.